Wednesday 25 April 2012 12.58 EDT
First published on Wednesday 25 April 2012 12.58 EDT

Royal Mail faces a "spiral of decline" unless extra conditions are imposed on competitors seeking to muscle in on the postal delivery market, the company's chief executive warned on Wednesday.

Moya Greene said unregulated competition poses a risk to the six-day-a-week universal service obligation that is a cornerstone of the Royal Mail's business. Greene spoke in the wake of a new trial launched this month by rival TNT Post UK, which is taking on the traditional postie by delivering direct to doorsteps in west London.

Speaking at the annual conference of the Communication Workers Union in Bournemouth, Greene warned that competition for so-called end-to-end deliveries is an "immediate threat". She said: "I am fearful that competition, if it does not have conditions imposed, will soon begin a spiral of decline in Royal Mail that will be very difficult to staunch."

Royal Mail is concerned that TNT UK will cherry-pick the most profitable parts of the country, like London and other cities, thus reducing revenues that Royal Mail needs in order to fund deliveries to rural areas. Greene added that Royal Mail faced "hard years" ahead, because if it is unable to compete in profitable areas of the business, other parts would become more expensive to service.

A spokesman for TNT UK said: "There is independent research that has been concluded that where competition takes place in end-to-end delivery it has improved the overall performance of the universal service provider." The government is hoping to sell off all or part of Royal Mail next year or in 2014 and has backed next week's increase in stamp prices, which the Royal Mail says will make its business more financially robust.

Greene defended price rises - up from 46p to 60p for first class and 36p to 50p for second class - saying they would still be "incredible" value for money and half the cost of posting letters in France.

Dave Ward, CWU deputy general secretary, said: "TNT's end to end deliveriesare the obvious next step in postal competition, but we fear this could leadto downgrading of services and jobs across the industry. We share many ofRoyal Mail's concerns about how this will affect the universal service anddeliveries for everyone."